As of August 17, 2009, we entered
into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with
Optimus Capital Partners, LLC, d/b/a Optimus Special Situations Capital
Partners, LLC an unaffiliated investment fund (the “Fund”), which provides that,
upon the terms and subject to the conditions set forth therein, the Fund is
committed to purchase up to $5,000,000 of our Series B Preferred
Stock. Under the terms of the Purchase Agreement, from time to time
until August 16, 2011 and at our sole discretion, we may present the Fund with a
notice to purchase such Series B Preferred Stock (the “Notice”). The
Fund is obligated to purchase such Series B Preferred Stock on the tenth trading
day after the Notice date, subject to satisfaction of certain closing
conditions. The Fund will not be obligated to purchase the Series B
Preferred Stock (i) in the event the closing price of our common stock during
the nine trading days following delivery of a Notice falls below 75% of the
closing price on the trading day prior to the date such Notice is delivered to
the Fund, or (ii) to the extent such purchase would result in the Fund and its
affiliates beneficially owning more than 9.99% of our common
stock. Our ability to send a notice is also subject to certain
conditions. Therefore, the actual amount of the Fund’s investment is
not certain.
In connection with the Purchaser
Agreement, we also issued to the Fund five-year warrants to purchase 6,750,000
shares of our common stock at an exercise price equal to the closing price of
our common stock on the trading day prior to the execution of the Purchase
Agreement. The number of shares exerciseable under the warrant will
be equal in value to 135% of the purchase price of the Series B Preferred Stock
to be issued in respect of the related Notice and the exercise price of a
corresponding number of shares is subject to adjustment to equal the closing bid
price of our common stock on the trading day preceding the
Notice. Each warrant will be exercisable on the earlier of (i) the
date on which a registration statement registering for resale the shares of
common stock issuable upon exercise of such warrant becomes effective and (ii)
the date that is six months after the issuance date of such
warrant.
The Series B Preferred Stock is
redeemable at Registrant’s option on or after the fifth anniversary of the date
of its issuance. The Series B Preferred Stock also has a liquidation
preference per share equal to the original price per share thereof plus all
accrued dividends thereon, and is subject to repurchase by us at the Fund’s
election under certain circumstances, or following the consummation of certain
fundamental transactions by us, at the option of a majority of the holders of
the Series B Preferred Stock.
Holders of Series B Preferred Stock
will be entitled to receive dividends, which will accrue in shares of Series B
Preferred Stock on an annual basis at a rate equal to 10% per annum from the
issuance date. Accrued dividends will be payable upon redemption of
the Series B Preferred Stock. The Series B Preferred Stock ranks,
with respect to dividend rights and rights upon liquidation senior to our common
stock and our Series A Convertible Preferred Stock.
In a concurrent transaction the Fund
will borrow up to 10,000,000 shares of our common stock from certain of our
non-affiliated stockholders.
The Series B Preferred Stock and
warrants, and the shares common stock issuable upon exercise of the
warrants have not been registered under the Securities Act of 1933,
as amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements.
Out of the gross proceeds of this
Offering, we are obligated to pay Source Capital Group (the "Placement Agent")
10% of the amount we realize on the sale of the Series B Preferred Stock. We
will also issue to the Placement Agent, warrants to acquire 5% of the shares of
our Common Stock which we deliver on exercise of the Warrants with an exercise
price equal to the exercise price of the Warrants that were exercised. (the
"Placement Agent Warrants"), which warrants are exercisable for a five year
period, will contain cashless exercise provisions as well as anti-dilution
provisions in the case of stock splits and similar matters.
In order to secure amendments to our
Certificate of Designation with respect our Series A Convertible
Preferred Stock (“Series A Shares”)which were required in order for us to enter
into the Purchase Agreement, we agreed that that upon any issuance by the
Company of any Common Stock with an effective price per share of Common Stock of
less than $0.35 per share (“Triggering Issuances”)(subject to adjustment for
reverse and forward stock splits and the like), the holders of the Series A
Shares(the “Series A Holders”) may, in their sole discretion, at any time
thereafter, pursuant to the conversion terms set forth in the Certificate of
Designation of the Series A Preferred Stock, convert at the per share price
which applied to the Triggering Issuance, such number of shares of Preferred
Stock as will result, in the aggregate, in the issuance by the Company of the
same number of shares of Common Stock to the Series A Holders as were issued in
the Triggering Issuances, which rights will be exercisable by the Series A
Holders pro rata to the number of shares of Preferred Shares held by each of
them on the date the Triggering Issuances occur.
A copy of the press release issued by
The Company Services, Inc. on August 18, 2009 concerning the transaction is
filed herewith as Exhibit 99.1 and is incorporated herein by
reference.
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Item
7.01
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REGULATION
FD DISCLOSURE.
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On August 18, 2009, we issued a press
release with respect to the matters referred to herein. A copy of the
press release is furnished herewith.
Item
9.01
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3.5
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Certificate
of Designation of Series B Convertible
Preferred
Stock.
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4.18
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Preferred
Stock Purchase Agreement, dated as of August17, 2009, by and among Drinks
Americas Holdings, Ltd. and Optimus Capital Partners, LLC dba Optimus
Special Situations Capital Partners, LLC, including all material
agreements related thereto.
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4.19
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Form
of Warrant, dated as of August 17, 2009 between Drinks Americas Holdings,
Ltd. and Optimus Capital Partners, LLC dba Optimus Special Situations
Capital Partners, LLC.
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99.1
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Press
Release dated August 18,
2009.
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